A firm that has an average age of accounts receivable that is significantly lower than the industry average:
A)may have higher credit standards and offer credit to only the most highly qualified customers.
B)may have credit terms that allow fewer days to pay before beginning to charge interest.
C)may offer a larger discount than the industry average to encourage customers to pay early.
D)All of the above.

Question

Quizplus · Accepted Answer

All the options provided are plausible explanations for why a firm might have an average age of accounts receivable that is significantly lower than the industry average. Higher credit standards, shorter payment terms, and larger early payment discounts can all lead to quicker payments from customers.

A Firm That Has an Average Age of Accounts Receivable